Interview with Tim Calkins: Part 2

Part 2: Interview with Tim Calkins

ART
As you mentioned, it seems to be that cross-functionality these days is almost a necessity rather than a choice.TIM
Oh, yes, well I think that’s absolutely right because you really don’t have the leeway right now to say, “Let’s all just attend to our own functional silo.” Because that world I think has really gone. I mean, I am sure there are some companies that can exist like that, but most industries the competition is so intense, and the Operational challenges and the Supply Chain challenges are so critical that it takes everybody working together to make it all go seamlessly.ART
Yes, and they might exist like that but very likely not for long – unless it is a very small field – and there is definitely unlikely to be growth.TIM
That is exactly right, yes.ART
What kind of trends do you see in terms of not only Marketing, but what kinds of trends do you see from different companies, maybe international companies?TIM
There are a number of big trends that are out there. I mean, clearly the rise of really the second, and the third, and the fourth generation of Internet Marketing is huge – and I think that is affecting everybody – which is changing how we communicate and how companies interact with people and with their consumers. And I think that surely is a huge trend we are seeing you there.
I think the economy is going to be a big issue for a lot of companies as well because there is no sign that things are getting better quickly. So I think companies are really going to have to be looking at the question of: How fast can we grow in this kind of an environment? And then what are the things we really focus on to try to make that happen?
The third big thing that I think is going to be interesting to watch is what is really going to happen in terms of global Supply Chains, and will we see more acceleration in the trends of… will we see more and more production going to places like China – or will we actually see it begin to swing back?
And my hypothesis is that we are actually going to begin to see this swing back a little bit. And I think we are going to begin to see companies move production from China back to other countries because…ART
Yes, I have actually spoken on this topic with a number of international companies’ Operations Managers, and they say China is no longer as attractive a field, and there is already a lot more swinging back. It seems to be in progress or in planning to move more to countries that do have an infrastructure: either Asian countries – I think Indonesia was one of them – and others in that area, where the workforce flow seems to be more affordable. Because it seems in China inflation and everything is pushing on the Supply Chain a lot.TIM
Well, and I think we are going to see companies begin to break in different directions. The ones who are really focused on having a low-cost position, and where that is critical, I think they are going to continue to move to seek the lowest-cost labor and the most efficiency, wherever that might be.
But then I think you will see other companies move back to maybe even some of the more high-cost countries, because what they will say is that the flexibility that we pick up from doing that, and the reliability and consistency… And there are some advantages to doing that – and even from a branding perspective – that I suspect you are going to see much more variety I guess in terms of how people manage their production and Supply Chains than perhaps one tidal wave of momentum that we have seen over the past decade.ART
So you think that some of them will start moving back to even the United States rather than just be in India and China.TIM
Absolutely. Well, I think you will see, depending on the firm and the strategy – and really how they are going to differentiate in this world – I think we are going to see all of that.ART
So you mentioned economy is a big issue – global forces moving around. What is your view on the economy and how it might be affecting the United States, for example?TIM
Well clearly the economy is a dominant theme I think for any company competing – whether they are in the US, or over in the EU, or in the more developing countries that are moving a lot faster.
And I think the challenge for the US and the EU, I mean, that is very much about, for the companies there, it is like how do you get any profit growth in an economy that is fundamentally growing very slowly? And I think that is the core challenge that a lot of companies are looking at right now – which is when the economy is growing slowly and there is very limited, inherent growth, how do you then squeeze out profits in that kind of an environment?
And I think that is really the core challenge for companies there. You know, it is a very different challenge, though, if you are over in China, or India, or some of the fast-growing economies. There, there is a very different set of challenges. In a way we have, as people have said, there is very much of a bifurcated world here, where we have got the explosion of growth in places but also then nearly economic stagnation in other places.ART
Yes. And it seems to be that more focus is always given to those that are growing – but people forget there is Japan, there is the UK where economies are pretty much just not going up or down – probably more down than up.TIM
Yes. And they are still huge. So there is a question, then, about how do you manage that across the different…? And I think one of the most important things companies need to do is to align their objectives, you know, with the economy. So if companies in some of these very mature environments think they are going to be growing at 20 or 30% a year in terms of profits, well that is just highly unlikely – unless you have got a really spectacular innovation or spectacular product that maybe can do that.
But for most of them I think setting clear and achievable goals will be so important.ART
And do you see that those companies, let’s say in the UK, that are already pretty much tapped-out – there is nothing else to do – are they looking to expand into other international markets? And how feasible is this for them?TIM
Well I think you are never fully tapped-out in a country, in a market, I think – there are always opportunities to grow, even in those mature environments. But I think surely for companies that find their business largely skewed to those economies, one of the top priorities has ahs to be how do you go position yourself in the more growing environment?
I mean, that was the story with Kraft Foods of course, with them going out and buying Cadbury – really a move to reposition the portfolio and get themselves into faster-growing countries where just inherently there is a lot more growth coming out of there.ART
And why do you think they wanted to get that growth? Was there stagnating? What was the case there?TIM
Well the core problem for Kraft is that as a company they have a lot of businesses that are very profitable but very immature, and located in countries where there just isn’t a lot of growth. You know, inherently if you look at, for example, the cheese business in the US, well, it is very tough to drive profits on that business because the category is mature; you have got a lot of private label competition which limits what you can do on pricing; you can only strip off costs so long. It is just a big, mature business that is going to do fine – but it is not going to grow.
And for Kraft, I think they clearly said, you know, “We have got to change the mix in our portfolio; we have got to add more businesses that are present in these fast-growing economies.”
So in that case I think Kraft did a nice job about repositioning the business and getting some faster-growing businesses into the mix – and I think that is going to help Kraft a lot, going forward.ART
Yes. So with regard to Kraft Foods, are they adapting the way you think they should be adapting? Are they growing, changing up the pace as they should be – or do you think there is more to do?TIM
Well, certainly form the outside it looks like they are making a lot of changes in their portfolio – and I think that makes a lot of sense. So I think on balance it looks like they are doing the right things, because, you know, there are two things in this world that I think companies have to do: one is to really get the established businesses performing as well as they can; and then it is to add new businesses that can really drive a lot of growth. And sometimes that is through new product launch, and a lot of times that is through acquisition. But one way or the other you have got to have those things.ART
Yes. And you mentioned that the established businesses should focus on their established business and make sure that is optimized. Can you talk a little bit about that – why, and your views on that?TIM
Well, the challenge on any established business is how do you squeeze out all the profit growth you can? And I think for an established business, the challenge is that profits are hard to come by, especially in terms of growth. And that makes efficiency so important, because every little bit of efficiency you can get from your Supply Chain, from the manufacturing process, from your sales process – all of that can contribute a lot to getting to some growth on the business.
Part of the issue is there is not a lot of great levers sometimes in these established businesses – so efficiency, and just the ability to get out there as efficiently as you can becomes really important.ART
Yes, that is when the Operations Management comes in. So maybe for them they need to reshuffle their structure, hire the best Operations Managers. And especially if it is a huge industry and they have huge products – I see your point that for them, you can’t really grow your Marketing as much but maybe you can get whatever you can from the Supply Chain, from the efficiency, before you look into going to other fields.TIM
That’s right. And the Operations challenge I think is very different, depending on what kind of an environment you are in. I mean, in a lot of these mature countries the co-Operations challenge is all about efficiency and all about how do you squeeze efficiency out of the process.
But in the emerging markets it is a different question entirely – there it is: How do we support the growth, how do we make sure we can be there to support it as the business grows?ART
How do you see Operations Management as a profession developing in the future?TIM
Oh, I think it is a terrific field. And I think it is going to be increasingly important. You know, I think it is important today but I think it is going to be increasingly an area where companies are going to focus on.
You know, the one thing is that the global perspective I think has got to be so important in that world these days. The challenge of managing a global network and global sourcing I think is important. So in that field, I think what is perhaps new there is the importance of global experience in terms of managing Operations around the world but also managing Supply Chains all around the world. But I think it is going to be a really exciting field in years to come.ART
Well, I think it is an exciting field – it is just the media doesn’t see that!TIM
Well, you know, I think it is the behind the scenes sometimes that doesn’t get all the attention. But the other piece of it I think is companies are sometimes a little bit reluctant to share what they are doing – whether it is either very effective or very ineffective – either way, they don’t necessarily want the publicity.ART
It seems to be that it is a very internal field. I just came from the Conference in Las Vegas, APICS – the Association for Operations Management. It was 2000 people, a pretty big Conference. But it seems that if you ask any HR person what they know about Operations Management, it is usually either a blank stare or silence – neither of which is good. So it seems to be the field is great but, for example, whenever I see, you know, on Yahoo or Bing they have this “Top Five most on the radar screen jobs,” Operations Management is never one of them – but it should be!TIM
Absolutely! I’m totally with you!ART
It is actually surprising to me how little awareness there is. Actually you mentioned a very interesting point which I haven’t heard before – that some companies might not wan to share the internal structure of it. It is a very, very good point. And why do you think that? And could it be either good or bad?TIM
Well, either side of it – because if somebody is doing some that that is really good in terms of how they manage their Operations or Supply Chain, I think the last thing they would want to do is go and share that with their competitors because oftentimes you would lose your point of difference.
And likewise if a company is really struggling and having terrible problems, well they are not going to publicize that either because that is the last thing you want to tell your investors and employees – that “We really can’t get it together.”
So I think in either case what you see is that people don’t really discuss it, and as a result it doesn’t get them a lot of attention. But, yes, it is one of the fascinating things, is how does that all work these days, and the complexities and the opportunities are huge. But for a lot of reasons I think it is just not on the radar screen like it might be.ART
That is a very good point – I have not heard that point before, though I have spoken with plenty of experts in this field. But I don’t think they see it from… I think you have also a Marketing perspective and that could be kind of emphasizing that – you know, you don’t want to share it, especially in Marketing!TIM
Well, yes. And in Marketing often they are more inclined to share, I think, than they are in Operations because Marketing is inherently visible. You know, because you see the advertising around and the websites around…ART
It is hard to hide it.TIM
It is hard to hide it. Whereas the Supply Chain stuff and the Operations side of things is very easy to hide – which is why I think the Marketing stuff inevitably will surface. But the Supply Chain stuff really doesn’t, unless you really go looking for it.ART
Very interesting, yes. That is a very different angle. Now that I think about it, it makes a lot of sense because we at www.OperationsManager.com entered the field and we found there was such a lack of information on the behind the scenes that it was almost unbelievable!TIM
Yes.ART
And that is probably a good explanation – they don’t want to share!TIM
There you go! Absolutely!ART
What is your view on what are the specific fields that you think might be affected more than others in the Operations field? And maybe with regard to Operations related to the Marketing field in the future – so people getting into Operations Management, or are they looking to get their MBAs in something – are there certain fields that might better in the future than others?TIM
Well, I think that the trends we are going to see, you know, it is going to go back to global sourcing and global efficiency, clearly. So global experience I think is going to be really important.
I think the other big thing we are going to see is the role of innovation. And that is going to be continually important. So I think understanding how innovation occurs and is managed and is adopted I think is going to be another really important topic that is going to drive what companies are looking at, to a very large degree.ART
And can you elaborate on “innovation?” because it is such a broad word. What do you see as innovation?TIM
Well, in innovation I think particularly around new products. You know, there is going to be a huge desire to get new product ideas out in this world. I think the cycle time will fall so there is going to be more new products in a shorter period of time, especially in technology-driven industries, for example. There is going to be this just a continuing drive to get new products out really quickly.
What that speaks to is partly that is, you know, around understanding what consumers want. But there is a really important link to say “What can we then produce? And how do we actually take ideas and commercialize them in a way that is efficient and effective in this environment?” And understanding how to do that is a place… that is an opportunity I think for anybody going into Operations Management – because the ability to connect innovative ideas and turn them into reality is really difficult but incredibly important for companies – and I think only getting more so.ART
And what are some of the personality traits you see that would be necessary or at least helpful to have for an Operations Manager?TIM
I think – and again, it depends on which area in the field they are focused on – I think flexibility is going to be incredibly important; I think cultural sensitivity and the ability to work with people from different cultures and different environments will be so important.
I also think that understanding the financials of the business will be really important, because the ability to understand the financial ramifications of different moves I think will be really important – and will probably separate the really good Operations people from the people who are just in there doing their job.
I mean, ultimately in business you have got to tie it back to the money and the resources. So the ability to connect the Operational issues back to the financials I think is going to be so important.ART
So sort of being able to understand all different parts. Here is a question about cultural flexibility: You have probably worked with different countries – what is your take on cultural flexibility and being flexible?TIM
I think it is very important and I think it is tough to do – because it is very hard to work successfully across cultures. I mean, you really need to have an appreciation for it; you have got to have an understanding about what the different cultures are looking at and how they operate. And then you have got to have I think sort of the resilience to mold yourself and adapt, to operate in those environments.
I mean, you just consider the challenge of working with a team from Japan, or a team from France – I mean, just a completely different cultural environment. And the French, almost by nature, are sort of combative and independent, and quick to challenge you and push back and say, “No, I think that’s wrong. Vous êtes stupides!”) – very French…ART
I guess you have had some experience of that!TIM
Oh yes, absolutely! But you take that same approach to a group of Japanese executives, and that would just be a complete disaster! So the challenge in developing the ability to work globally – I think it is tough but I think for somebody in Operations right now I think it is a really important part of the mix.
You know, in the short run I am sure people in Operations could be very successful in a country; but to get to senior roles, the ability to work across I think is going to be essential.ART
Yes, senior roles are going to be goals for some people. So, the last but not least question: What are your takeaways? What advice would you give to people who are looking to get into the Management field – let’s say the Operations Management field – and what should they do, what should they keep in mind?TIM
Well, I think in terms of managing a career, I think it is always useful to think of it as a bit of a Marketing project, because the Marketing concepts apply to products and services, surely – but they also really apply to people
And so if you think about the people that will be most successful – and this is true I think in Operations or really any field – are the people that will provide something unique and special.
So for somebody starting out in a career I would say: Do a good job, of course, at all things – but develop an expertise at something. Because if you can be your company’s expert in something, then you have got really value and you become a really important player to the team.
So even if that is being an expert in a particular software package, or an expert in a particular country, or an expert in a particular approach, if you do that you make yourself different, and unique, and special. That is the thing I think that is going to move people ahead.
It is the same challenge for companies these days; you know, just doing a good job out there isn’t enough because there is too much competition in the world. You have got to be different, and special, and unique in some fashion. And I think that applies for careers as well as companies.ART
Would you have something specific they could do – like you said “expertise in a certain area;” maybe let’s say they want to go into Operations Management Supply Chain – should they set up something, add something specific to their resume?TIM
Well, sure, because you have got something unique in that space. For example, it is one thing to be good in Supply Chain Management – but it is better to say that, “I am an expert at working with companies from the southern part of China.” Because then all of a sudden now you have got something that maybe other people might not have.
Or you could say, “I am unique because I have worked with companies from both China and from India, and I know the differences about how to operate between those two countries.” That is more useful. It’s better.ART
Oh, wow, that is great advice. Yes. Immediately you can almost visualize that that person knows how to deal with them; maybe has connections. And you might or might not have the connections, but if you can imagine that the person might have something then it changes a lot.TIM
Absolutely! There you go! Terrific.ART
Well, thank you very much, Tim, for talking to us. We really appreciate sharing this knowledge with our readers and listeners.TIM
Absolutely! Well I’m happy to help – and happy to help any time!ART
Pleasure! This was Tim Calkins; he is the Founder of Class 5 Consulting, and is currently teaching for the Kellogg Institute of Management. Have a good day.TIM
Thank you! Bye-bye.

Tim Calkins Biography:
Tim is clinical professor of marketing at Northwestern University’s Kellogg School of Management. He teaches Marketing Strategy, the most popular marketing elective in the Kellogg MBA program and Bio-Medical Marketing, one of the few courses available in the world focused on marketing in the pharmaceutical and medical device industries.
Tim teaches in a number of Kellogg’s executive education programs, including the Executive Development Program and the Kellogg Management Institute. Tim is co-academic director of Kellogg’s branding program.
Tim is the author of Breakthrough Marketing Plans (Palgrave Macmillan, 2008) and co-editor of Kellogg on Branding (John Wiley & Sons, 2005). He has written teaching cases including Crestor, MedImmune: FluMist Introduction and Eli Lilly: Xigris.
Tim has received numerous teaching awards. He received the Top Professor Award from the Kellogg Executive MBA Program in 2007 and 2009 and the Sidney J. Levy Teaching Award in 2008. In 2006 he received the Lawrence G. Lavengood Outstanding Professor of the Year Award, the top teaching award at the Kellogg School of Management.
He joined the Kellogg faculty in 1998 as adjunct assistant professor of marketing. He became clinical associate professor of marketing in 2002 and assumed his current position in 2006.
In addition to teaching at Kellogg, Tim works directly with major corporations around the world on marketing strategy and branding issues. His recent clients include Abbott Laboratories, Baxter, Eli Lilly and Northwestern Mutual Life. He is managing director of Class 5 Consulting, a marketing strategy firm.

Tim is frequently cited by the media; he has been quoted in publications including Business Week, Newsweek, the Financial Times, The Wall Street Journal and The New York Times. He has appeared on NBC, CBS, ABC, Fox, and CNBC.
He is on the board of the Alliance Française de Chicago and the Lycée Français de Chicago.
Tim began his career at consulting firm Booz Allen and Hamilton, where he worked on strategy and marketing projects. He joined the marketing team at Kraft Foods in 1991. During his almost 11 years at Kraft, he led businesses including A.1. steak sauce, Miracle Whip, Taco Bell, Seven Seas and DiGiorno. While at Kraft he was responsible for the launch of more than two dozen new products.
Tim received his BA from Yale University in 1987 and his MBA from Harvard Business School in 1991.